Tool 1.10 Indicative industry benchmarks
Primary farm business and sheep industry benchmarks
The table below lists the questions answered for each of these industry benchmarks. For best results, benchmarking should be done by a service provider applying a standard methodology that provides you information that can be compared with others across Australia. Various agricultural consultants provide this service.
|
Whole Farm |
Question Answered |
Calculation |
|
Net Profit Before Tax |
What is the surplus that my business has generated this year? |
Earnings before interest, lease payments and tax |
|
Return on Assets Managed (ROAM) |
Provides an indication of the return being derived from the total assets under management in the business. |
Earnings before interest, lease payments and tax |
|
Return on Equity (ROE) |
Is the farm meeting your wealth creation targets? This is the return generated from the owners’ capital invested in the business. |
Earnings before tax |
|
Finance coverage ratio |
Is the farm generating enough profits to meet its debt servicing obligations? |
Earnings before interest, lease payments and tax |
|
Peak Debt |
Will your finance arrangements cover your working capital requirements over the year? |
Lowest working account balance for the year |
|
Expense Ratio |
Are you generating enough income to meet your ongoing expense needs? |
Gross profit before interest and tax |
|
Enterprise Benchmarks |
Question Answered |
Calculation |
Reported benchmark |
|
Productivity |
How many kilograms of product did this enterprise produce this year? |
Quantity of product produced (kg) ÷ 100 mm rainfall* |
Kilograms of wool or meat produced per hectare per 100 mm of rainfall |
|
Price Received
|
The total price you received for the goods you produced and sold this year. |
Gross income for the product |
Income per kilogram of meat or wool produced |
|
Cost of Production (COP)
|
What did it cost to produce a kilogram of product? This is an essential figure to use in comparison with other like businesses to understand if your COP is high, on par, or low compared with other enterprises. It is also essential to understand if the price received compared with the COP provides adequate income to meet your business goals (see chapter 1.3). |
Total expenses |
Cost per kilogram of meat or wool produced |
|
Stocking Rate (SR)
|
How many dry sheep equivalents (DSE) are you running per hectare? This figure can be used to compare with other like enterprises to understand if your SR is high, on par, or low. For DSE ratings, see tool 11.1 in MMFS Module 11 Health and Contented Sheep.
|
Stock numbers as DSEs ÷ 100 mm rainfall* |
DSE per hectare per 100 mm of rainfall N.B. will vary depending on land class and is most useful to compare with like regions. |
|
Gross Margin |
Gross income from an enterprise less the variable costs incurred in achieving it. It does not include fixed or overhead costs such as depreciation, interest payments, rates, or permanent labour. |
Enterprise gross margin |
Gross margin per hectare |
* 100 mm rainfall method is utilised to bring numbers from various enterprises and regions back to a standardised figure to allow them to be compared. To work out what to divide the number by, take your average annual rainfall (or this year’s actual rainfall, if you are looking to evaluate the year’s performance), and divide it by 100 to give you the figure you need.
Example: the figure you need if you have a 420 mm average annual rainfall is 420 ÷ 100 = 4.2.
Examples of enterprise benchmarks that allow deeper analysis
|
Benchmark |
Calculation |
|
Scanning percentage (%) |
foetuses scanned ÷ total number of ewes joined x 100 |
|
Conception rate (%) |
ewes scanned pregnant ÷ total number of ewes joined x 100 |
|
Percentage scanned empty (%) |
number of ewes scanned empty ÷ total number of ewes joined x 100 |
|
Lamb marking percentage (%) |
lambs marked ÷ total number of ewes joined x 100 |
|
Lamb survival percentage (%) |
lambs marked ÷ total number of foetuses scanned x 100 |
|
Ewe failed to rear/Lambed and lost percentage (%) |
ewes dry at lamb marking (from wet & drying) ÷ ewes scanned pregnant x 100 |
|
Weaning percentage (%) |
lambs weaned ÷ total number of ewes joined x 100 |
|
Weaner survival percentage (%) |
number of lambs at 12 months ÷ lambs weaned x 100 |
|
Ewe survival percentage (%) |
number of ewes in mob at end of period (e.g. marking) ÷ ewes in mob at start of period (e.g. scanning) x 100 |
|
Average wool cut per head (kg) |
total kg shorn ÷ number of sheep shorn |
|
Average clean wool cut per head (kg) |
total kg shorn x yield (from test results) ÷ number of sheep shorn |
|
Average fleece value per head ($) |
total price received for wool ÷ kg sold |
|
Average wool cut per hectare (kg) |
total kg shorn ÷ grazed hectares |
|
Average kg weaned per ewe (kg) |
liveweight of all lambs weaned ÷ ewes wet at lamb marking |
|
Kg weaned per hectare (kg) |
liveweight of all lambs weaned ÷ grazed hectares |
|
Average sale weight (kg) |
liveweight of all lambs sold ÷ number of lambs sold |
|
Kg lamb per DSE (kg) |
liveweight of all lambs sold ÷ number of DSE run for the year |
|
Average price as a % of micron indicator (%) |
price received for wool sold ÷ price for relevant AWEX micron indicator x 100 |
|
Average price as a % of lamb indicator (%) |
price received for lambs sold ÷ price for relevant NLRS indicator x 100 |
|
Gross income per DSE |
gross enterprise income ÷ number of DSE run for the year |
|
DSE managed per labour unit |
number of DSE run for the year ÷ number of labour units used within the enterprise for the year, expressed as a decimal |
|
Gross income per labour unit |
gross enterprise income ÷ number of labour units used within the enterprise for the year, expressed as a decimal |
Dry Sheep Equivalent (DSE) ratings
For DSE ratings for a range of livestock and livestock classes, see tool 11.1 in MMFS Module 11 Healthy and Contented Sheep.
